FirstNews - February 26, 2009

Despite missing analysts' expectations, MetroPCS shares rose over 10 percent in early trading after it swung to a fourth-quarter profit and reaffirmed its earnings guidance.

Subscriber growth and rising service revenue brought the discount carrier to a fourth-quarter profit of $15 million, or 4 cents per diluted share, up from a loss of $47 million, or 14 cents per diluted share, in the same period last year.

Though service revenue climbed 30.3 percent in 2008, the rise was partially offset by a 28 percent decline in equipment sales, which fell to $57.6 million in the fourth quarter from $79.9 million last year.

Analysts predicted earnings of 7 cents per share on revenue of $765.26 million. The company came slightly under expectations on rising churn, falling ARPU and declines in equipment sales, posting revenue of $724 million, a 22.5 percent increase from last year's figure of $591 million.

Though revenue rose, ARPU fell 5.4 percent, to $40.52 from $42.83. The company attributed the drop in ARPU to higher participation in lower-margin family plans, which was partially offset by an increase in higher-cost service plans resulting from the company's elimination of unlimited text messaging in the $40 rate plan.

Churn rose three percentage points, to 5.1 percent from 4.8 percent last year.

Despite difficulties with ARPU and churn, the company reported the best quarterly subscriber growth in its history, with 520,000 net subscriber additions, said company CEO Roger Linquist. MetroPCS got a boost from ongoing wireline defection and a shift in spending habits as cash-strapped consumers looking to cut expenses move to flat-rate plans.

The company reaffirmed its November guidance on net subscriber additions, capital expenditures and earnings before interest, taxes, depreciation and amortization (EBITDA). For 2009, EBITDA should come in between $900 million and $1.1 billion, with net adds rising between 1.4 million and 1.7 million. Capital expenditures are expected to fall to between $700 million and $900 million, compared with last year's capex of $1.2 billion.

Though it plans to lower capital expenditures, MetroPCS said it will focus on building out networks to cover 40 million people during 2009 and 2010, including the Boston and New York metropolitan areas, where service was launched this month.

For the full year, the company posted net income of $149 million, or 42 cents per diluted share, up 49 percent from $100 million in 2007, or 28 cents per diluted share. Revenue rose to $2.75 billion from $2.236 billion last year. MetroPCS added more than 1.4 million net subscribers, bringing its total subscriber base to 5.37 million.

Copps Vows a More Open FCC

By Brian Santo, CED Magazine

Acting FCC Chairman Michael Copps this week proposed a blueprint of a more open FCC, advocating for spending more time serving the public good than "refereeing disputes between powerful interests."

He referred to the mandate given to the FCC in the stimulus bill to develop a broadband roadmap, but he discussed it in only the vaguest of terms, noting that the FCC intends to open a discussion on the issues involved.

"How to keep that Internet open and dynamic is an important part of this dialogue," Copps said, according to the prepared text of his remarks. "But so is how to ensure that as the Internet becomes our primary vehicle for communicating with one another, it protects the public interest and informs the civic dialogue that America depends upon for its democracy."

As for the future direction of the FCC, Copps said the commission has strayed from its mandate. He said explicitly that he was not singling out any specific previous regime at the FCC, but his vision was an obvious and stark contrast to the way his immediate predecessor, Kevin Martin, ran the agency. During Martin's tenure, especially, agency information flowed in only one direction, up the hierarchy and through a single person – the chairman.

Copps also advocated for a more consistent FCC – he used the word "predictable" – an FCC that would not issue edicts like "thunderbolts from above." That is not the way for an independent agency to make policy or to discharge its public interest obligations, Copps said. Again, his remarks addressed specific complaints he, other commissioners and many other FCC watchers expressed publicly about the Martin regime:

"When I was in the Commerce Department and we met with foreign governments, we were always advocating for ‘the rule of law." Maybe we should start at home," Copps said. "Predictability also means that decisions flow from good data, hard facts and acknowledged expertise. We do too little of our own research and have come to rely too much on the data and studies of others – too often from the very parties trying to drive a particular outcome.

"For the sake of good policy, for the sake of our own credibility, the commission just has to do a better job of making sure our proposed rules are better grounded and that they are sustainable – sustainable in the court of law, in the court of Congress and in the court of public opinion. We can afford to do this; we can't afford not to. And I believe that such processes befit not just the FCC, but the other independent regulatory agencies, as well. The new administration's Open Government Initiative is music to my ears and offers a wonderful opportunity to make this happen."

Copps prepared the address for the occasion of the 75th anniversary of the FCC and the Communications Act of 1934, which established the agency.

In his address, Copps signaled that he was going to take the agency's enforcement responsibilities more seriously. That was backed up by action.

The FCC's Enforcement Bureau released an Omnibus Notice of Apparent Liability (NAL) against small telecommunications carriers – not identified publicly – for their failure to file the requisite annual Customer Proprietary Network Information (CPNI) compliance certifications with the commission.

The FCC slapped more than 660 small telcos with a total of $13.3 million in fines for failing to certify that they're keeping their customers' information safe.

Mobui Launches TV Chat Room App

By Luke Simpson

Mobui today announced the release of Mobui Audience Chat, a mobile application designed to link TV audiences through chat rooms on their mobile devices.

Broadcasters that use Mobui Audience Chat will be able to offer their viewers a branded version of the application with various chat rooms related to shows, celebrities or user groups. VH1 is already offering the application in the form of its Watch and Discuss Live Chat.

To get access, viewers can download the application from the iPhone, AT&T, Verizon Wireless or Sprint app stores.

Mobui's CEO John Burry hopes that the application will evolve into another form of social networking, linking viewers with friends and other fans. "People are familiar with chat rooms, but a completely new dynamic is created when you feed the discussion with a live activity such as a TV show."

In the spirit of social networking, users can choose a name, avatar and groups of friends.

Not surprisingly, Burry's main focus is iPhone users, due to their "insatiable" appetite for applications. Mobui had success last year with its SpongeBob SquarePants application, which reached No. 6 on the iPhone App Store's most downloaded list. Mobui also offers an app that allows users to program their TiVo from a mobile device.

Mobui Audience Chat currently caters to television broadcasters and viewers, but Burry believes that the interactive concept can be applied to any audience, such as radio listeners or sporting event crowds.

With Xumii, users can see everyone's status in one place and chat and share photos with friends across and between different networks. They can also update their own status and have it broadcast across all of their communities at once.

"Until now, there was no easy way to stay connected with friends scattered across different social and IM networks from a mobile phone. You had to launch multiple applications one at a time or go to multiple mobile Web sites," said Jennifer Zanich, CEO of Xumii. "We wanted to make it really easy to keep up with your online social life when you're out and about."

Xumii is one of many social networking aggregators striving to simplify communication between services like MySpace and Facebook. As it stands, most social networking sites operate behind a walled garden and do not allow cross-service communication.

When asked if these services will be opening up their networks, Warren Faleiro, vice president of Messaging and Mobile Media for VeriSign, said it will happen. "Yes, they will have to open up their walls… maybe a year or so," he said.

For now, users will have to stick with aggregation platforms and applications like Xumii to talk across the borders currently in place between social networking communities.

Executive Departures at Telstra, Yahoo!

By Monica Alleven

Telstra CEO Sol Trujillo is leaving the Australian operator after about four years, while Yahoo's Connected Life division head Marco Boerries signaled his resignation over the weekend.

Sol Trujillo

Marco Boerries

Telstra Chairman Donald McGauchie said Trujillo will leave the company on June 30 to return home to the United States. Various media reports site Trujillo's clashes with government and unfinished business in Telstra's transformation.

Trujillo joined Telstra in July 2005 after serving as CEO of London-based Orange. Before that, he was president and CEO of US West Dex and US West Communications.

Meanwhile, Yahoo! confirmed yesterday that Boerries is leaving the company for personal reasons. The Wall Street Journal's All Things Digital yesterday posted Boerries e-mail to staffers on Sunday. In it, he said he can no longer reconcile his personal needs, future plans and Yahoo; Boerries had been splitting time between Northern California and Hamburg, where his family lives.

His departure comes as new CEO Carol Bartz is expected to announce a management restructuring at the company.

The company said the Connected Life division developed a leadership position in mobile under Boerries' direction the past four years. Whether Yahoo! is able to hold onto that purported lead is uncertain. The company did not say if Boerries will be replaced.

At Mobile World Congress last week, the Connected Life team introduced Yahoo! Mobile, what it calls a personalized mobile starting point to the Internet.

Verizon Files Suit Against "Rabbit" Telemarketer

By Wireless Week Staff

Verizon Wireless filed a lawsuit to stop a Utah-based telemarketing company from calling its customers and employees to advertise the upcoming movie, "The Velveteen Rabbit."

The lawsuit, filed this week in U.S. District Court in Trenton, N.J., alleges Feature Films for Families illegally used an autodialer to call Verizon Wireless customers on behalf of a company called Family 1 Films, based in Los Angeles.

The lawsuit states that over 10 days in early February, nearly 500,000 calls were made to Verizon Wireless customers and employees from the telephone number 917-210-4609. When customers answered these calls to their wireless phones, they heard either a prerecorded voice message or an individual reading a script promoting the anticipated release of the film.

"Telemarketers continue to harass our customers and impinge on their privacy, often using illegal methods including autodialers," said Steven Zipperstein, vice president and general counsel of Verizon Wireless, in a statement. "Whatever their methods and whatever their product, these unlawful telemarketing calls are an annoyance to our customers and invade their privacy."

The lawsuit alleges violations of the Federal Telephone Consumer Protection Act, which makes it illegal to use an autodialer to make calls to wireless phones, as well as state fraud and privacy laws. Verizon Wireless also filed a motion seeking a preliminary injunction to stop the defendants from making these calls.

In 2005, Verizon filed suit against Intelligent Alternatives, a Sorrento Valley marketing firm for soliciting a million of Verizon's customers.

Aruba Networks 2Q Loss Widens

By The Associated Press

SUNNYVALE, Calif. (AP) — Wireless networking technology company Aruba Networks said Wednesday that its net loss widened in its fiscal second quarter, hurt by stock-based expenses and restructuring charges.

For the period ended Jan. 31, the company posted a loss of $6.8 million, or 8 cents per share, compared with a year-earlier loss of $3.5 million, or 4 cents per share.

Special charges in the quarter included $6.1 million in stock-based expenses, $1.2 million in amortization expense of acquired intangible assets and a $1.4 million restructuring charge.

Without the charges, adjusted net income came in at 2 cents per share, up from a penny a year ago, the company said.

Following the issuance of the report of results, Aruba shares gained 32 cents, or 12 percent, to $3.08 in after-hours trading. In the regular session before the report, the stock fell 12 cents, or 4.2 percent, to close at $2.76.

• Nokia is looking at entering the laptop business, according to a Reuters report on an interview that Nokia CEO Olli-Pekka Kallasvuo gave to Finnish national broadcaster YLE on Wednesday.

• Ericsson has been ranked at the top of the latest Vendor Matrix released by ABI Research. Alcatel-Lucent and Nokia Siemens Networks claimed the second and third spots in the company's new evaluation of worldwide managed network services vendors.

• Alaska Airlines will launch a customer trial of its new satellite-based wireless Internet service. Named Alaska Airlines Inflight Wi-Fi, the service can be used inflight on any Wi-Fi enabled device such as a laptop, smartphone or portable media player.

• Storyz, an entertainment and marketing service that lets friends tell multimedia-rich stories online and while mobile, unveiled its cross-platform beta to the public. The Motorola Ventures-backed company has designed a service for consumers to post text, photos and video for stories and invite their friends to participate virally across the Web, social networks and mobile via a streamlined interface.

•iSkoot added support for the Twitter community to its Kalaida mobile services platform, which the company says can deliver real-time Internet functionality to almost any handset sold today.